Choosing Mediator within Pre suit ADR Constraints

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					A LT E R N AT I V E D I S P U T E R E S O L U T I O N

The Role That
Steals the Show                               Choosing a Mediator
                                              within Pre-suit
By B. Rose Miller                             ADR Constraints
and John Horn

“Through the centuries, men of law            The time has come to give credit where credit is due.
have been persistently concerned with
the resolution of disputes… in ways           This article salutes the role of the mediator, who is
that enable society to achieve its goals
with a minimum of force and maximum           vital to the success of any pre-suit, alternative dispute-
of reason.”
                           Archibald Cox      resolution (ADR) program. Pre-suit ADR has vaulted
“The mediation by the serpent was nec-        onto the landscape in recent years as an           expenses in the millions of dollars. At the
essary. Evil can seduce man, but cannot       increasingly important tool to control legal       time of this writing, The Home Depot con-
become man.”                                  costs for in-house law departments, third-         tinues to refine its pre-suit ADR model to
                           Franz Kafka        party administrators, insurers, and even           further improve efficiencies in light of this
                                              outside defense counsel.                           challenging economy.
                                                 Previously, we presented the nuts and              The Home Depot’s model relied pri-
                                              bolts of The Home Depot’s pre-suit ADR             marily on in-house resources, but some
                                              program, piloted in 2007, which the com-           retailers now are trying pre-suit ADR mod-
                                              pany rolled out in 2008 nationwide. “The           els that utilize outside counsel in lieu of
                                              Home Depot Hammers Down Lawsuits                   or to supplement internal resources. This
                                              Using Pre-Suit ADR,” DRI Annual Meeting,           may become even more pronounced with
                                              October 2008. At that time we discussed            the development of retainer agreements
                                              the logistics of setting up the program,           designed to provide a level of predictabil-
                                              from finding sponsors within the company            ity and control over expenses. However,
                                              to choosing the right partners outside the         shuffling the players and tweaking the pro-
                                              organization to make it work. Our predic-          cesses does not change a mediator’s funda-
                                              tions about the success of the program were        mental role in ensuring successful results
                                              in fact realized. It achieved a settlement         through pre-suit ADR. If early settlement
                                              rate for pre-suit ADR claims exceeding 70          is your objective, experienced litigators
                                              percent, contributed to a 30 percent reduc-        on both sides of the aisle will tell you that
                                              tion in new general liability lawsuits filed        choosing the right neutral is one of the most
                                              against the company in 2008, and helped            important aspects of getting there. Even
                                              it achieve savings in litigation costs and         recalcitrant opponents have been lured

                                        B. Rose Miller is the chair of DRI’s ADR committee. She is presently an independent consultant in the
                                     fields of claims and litigation management, specializing in ADR programs. Before June 2009, Ms. Miller was
                                     in-house counsel for The Home Depot. John Horn is the managing director of AMCC, a Los Angeles-based
                                     dispute resolution provider that specializes in the development, implementation and administration of large
                                     scale ADR programs. He is an appointee to the California State Bar ADR Committee, executive board mem-
                                     ber of the California Dispute Resolution Council and teaches dispute resolution at Loyola Law School.

                                                                                                        For The Defense      August 2009      53

into a negotiation session by the prospect         Locale: Invitations to the program were         tor selection, we would never have added
of spending a few productive hours work-           grouped geographically. Accordingly, we         a case to the calendar, so this was part of
ing with a talented mediator.                      needed to retain local mediators for each       the deal. Although a handful of claimants
   But what do you do when the mediator            location. Many times, securing access           were put off and chose not to participate,
sought by everyone in town is not avail-           to facilities also became a component of        we were able to schedule far more claims
able? Or what do you do if the “ADR star”          this process.                                   than would have been otherwise possible
is available, but her or his budget-blowing        Availability: Under the program, the            by establishing this term, due to its effi-
hourly rate is problematic? Whether you            dates and locations were chosen well            ciency. As a compromise, when a claim-
are a participant in a pre-suit ADR pro-           before the mediator. Naturally, the             ant’s counsel did insist on a given mediator,
                                                   mediator had to reserve time based on           we sometimes agreed but required a dif-
                                                   projected claims that we might have to          ferent fee structure, and the mediator was
                                                   schedule for the program.                       approved by The Home Depot only after a
From state to state,                               Style: To maximize the effectiveness of         complete vetting.
                                                   the program, multiple mediations were              Take away: Take the upper hand in the
and even city to city,                             scheduled for a given day. This led to a        mediator-selection process to the fullest
                                                   series of stylistic requirements on the         extent possible.
lawyers act differently                            part of the neutral, such as the ability
                                                   to work quickly, multitask, and digest          Go Local
and have a different                               most, if not all, of the subject matter for     Few professions are more influenced by
                                                   the first time on the day of each session.       local custom and culture than the prac-
approach to settlement.                            Conflicts: Just as a good mediator may           tice of law. From state to state, and even
                                                   help persuade parties to participate,           city to city, lawyers act differently and
                                                   choosing the wrong mediator can have            have a different approach to settlement.
gram or just looking to settle a given case,       the opposite effect. Even though medi-          Approaches to case valuation are especially
this article will offer some strategies for        ation is a purely consensual process, we        regional. For these reasons, it is always to
choosing an effective mediator within the          had to be very careful in choosing medi-        your advantage to retain a local media-
constraints of a pre-suit ADR program. We          ators who did not appear partial.               tor. In the first place, plaintiffs’ counsel are
queried some of the best mediators that we                                                         always wary of settlement overtures by de-
have come across who participated in The         Choosing the Mediator                             fendants, especially when it becomes part
Home Depot’s pre-suit ADR program dur-           All of the mediators utilized under The           of a “program.” More importantly, having
ing the past two years about why and how it      Home Depot’s program were retained sub-           access to local knowledge and the ability to
works. Many of these mediators have han-         ject to the constraints listed above. Through     communicate in the language of the local
dled pre-suit ADR matters for a wide array       no small effort, we developed a talented          culture is invaluable to the defense.
of other clients. Their collective insight       and effective panel. Some mediators may              For instance, we had a particularly dif-
highlights some of the unique challenges         have compromised their rates a bit to fit          ficult claim in Georgia in which the parties
and opportunities this form of ADR prac-         into our structure, but most related that         had become entrenched in their opposing
tice can present.                                they gained significant exposure to plain-         positions—the claimant and her coun-
                                                 tiffs’ attorneys, defense lawyers, and indus-     sel had completely “dug in.” As The Home
Common Constraints                               try business clients alike by virtue of their     Depot’s headquarters is in Atlanta, our
In a perfect world, we would be able to uti-     growing reputations and that of the pro-          inclination was to use a previously tested
lize our preferred mediator, regardless of       gram. This, in turn, helped them to expand        mediator from the metropolitan area who
price, location, or availability. Unfortu-       their practice. As you will see, their stories    would make a two-hour trip for the case,
nately, that world rarely exists, and instead,   highlight some of the characteristics we          but the claimant refused to participate
we are forced to operate within a particular     thought were important when we selected           under those terms. Once we contracted
set of circumstances. The myriad of con-         them for their roles.                             with a local mediator, however, the claim-
straints we faced in selecting mediators                                                           ant agreed to come to the table. The neu-
for The Home Depot were not necessarily          You Choose                                        tral was an older gentleman, and despite his
unique to this program. Some of the con-         Under The Home Depot’s program, the               differing ethnicity from the claimant’s, he
straints we faced included:                      claimants’ counsel usually did not have the       was a long-time resident of the community
   Cost: The Home Depot chose to sub-            opportunity to choose the mediator. The           where the case would be tried, which reso-
   sidize costs of the program to entice         rationale was that they benefited from the         nated with the claimant. When the nego-
   greater participation, so rates were an       company’s agreement to subsidize, as well         tiation reached an impasse, he pulled the
   important factor. In most cases, we had       as its ability to negotiate, competitive rates,   claimant’s counsel aside and was able to
   to negotiate a reduced rate with a medi-      due to the nationwide scope of the program.       move counsel and claimant to settle due
   ator beforehand to keep costs within the      The reality was that if we had let the claim-     to his deep insight into the proclivities of
   guidelines of the program.                    ants’ counsel participate in every media-         juries and the court in that jurisdiction.
54    For The Defense     August 2009
   Take away: A local mediator helps even               I have become aware, through my               The eldest son, a big, burly bear of
the playing field for non-local defendants.           years as a mediator, of the importance        a man who owned his own construc-
                                                     of the ‘package’ and how a party’s set-       tion company, followed with an out-
Know the Client                                      tlement position is communicated to ef-       raged, table-pounding denunciation of
Doug Beattie, a top mediator in Tampa,               fectuate negotiations. Mediation is about     The Home Depot for not offering enough
Florida, and surrounding areas related               more than just money or making the            compensation to his father, “Papa has
this story:                                          claim go away; it can also be a business-     worked hard all his life to provide for
   As an experienced mediator, I always am           development tool. A consumer that walks       us,” he said angrily. “He deserves to be
   sensitive to the dynamics of what makes           away with a gift card as a result of a set-   paid for his injuries.”
   a plaintiff compromise and settle his or          tlement has not only agreed to drop the
   her personal injury case. So often, they          dispute, but also has agreed to do busi-
   look for a tangible concession, many              ness with you again in the future.
   times something in addition to money,             Take away: The mediator is your “ face”       A mediator’s creative
   from the defendant. They also talk of          to the other side and is responsible for car-
   ‘principle’ and most seem intent on get-       rying your message. It is important to choose    approach not only to
   ting the last word because, after all, they    a mediator who can help you to effectively
   have been injured as the result of the         package, then sell your offer.                   solutions, but also to
   defendant’s negligence.” In other words,
   how the offers from the defendant are          Know the Claimant                                communications, can lead
   packaged and what, if any, final ges-           Retired district court judge Michael Alonge
   tures of compromise are offered by the         of New York mediates frequently on Long          to distinct increases in
   defendant play a very important role in        Island and Manhattan. He talked of a par-
   whether a case settles.                        ticular case that required him to connect        settlement percentages.
      In many of The Home Depot media-            with the claimants:
   tions I have conducted, the dynamic of            One of my more memorable Home Depot
   ‘product loyalty’ has played a very im-           mediations involved an entire first-             At this point, I asked that both The
   portant part in getting the cases settled.        generation Greek family from Brook-           Home Depot’s representative and the
   These people love their Home Depot                lyn. The father, who said he was injured      family’s lawyer leave the room with me.
   store, continued to shop there after the          when some lumber fell on him, was there       In the hallway, it was made clear that this
   incident in question, and clearly do not          with his two sons, daughter, and three        was the final offer. The lawyer shrugged
   have the same attitude towards The Home           grandchildren. He was in his 70s, a wid-      helplessly. “They’re not going to take it,”
   Depot that I see in plaintiffs against other      ower, and was obviously and sincerely         he said.
   large, corporate defendants. It has seemed        loved by his protective family.                  I asked if he would let me talk to the
   to me, as the independent having access               His lawyer did a good job of present-     family. He readily agreed and the law-
   to them in private caucus, that these indi-       ing the case, and after the usual outra-      yers stayed outside.
   viduals came into the mediation process           geous and unrealistic demands from the           I went back to the conference room,
   already looking for a win-win resolution.         plaintiff, The Home Depot patiently pre-      presented the offer and received a stony-
   Yes, they had expectations as to what their       sented the realistic value of the alleged     faced response. I turned to Papa and in
   injuries might be worth and they wanted           injuries, given the comparative negli-        my best Brooklyn inflection said, “You
   ‘fair’ compensation, but they also wanted         gence of the father.                          know, if you were my uncle I would
   to be reasonable in their dealings with               The family, however, was adamant.         tell you to take the offer. It is fair, and I
   The Home Depot, because they liked the            Their lawyer was put in the uncomfort-        would really like you to leave here today
   company and wanted to continue their              able position of trying to persuade his       with money rather than wait years hop-
   relationship with it. Of special note is the      client and the rest of the family that,       ing for something better. Who knows
   extremely favorable reaction I got from           just perhaps, it made more sense for all      what the future may bring?”
   these individuals when, to bridge a final          concerned to settle at a fair figure rather       The old man nodded. Turning to the
   gap in the negotiations, The Home De-             than go through several years of costly       son, I said, “And if you were my cousin,
   pot offered gift cards in lieu of additional      litigation.                                   I would tell you to tell your father to set-
   cash. It seemed they saw this as the ad-              Finally, after a bit more than two        tle the case today. It is really in his inter-
   ditional concession they were looking for         hours of back and forth, demand and           ests. It may not be everything that you
   and were excited that the store they con-         offer, doors slammed and banging fists,        want, but Home Depot is even offering
   tinued to patronize was signaling that            the case was at an impasse. The daugh-        a gift card in addition to the money. It is
   their continued business was desired.             ter, a school teacher, made an emotional      a reasonable settlement, and I know you
   Every conference that I have mediated in          plea, explaining how this injury had          are a reasonable man.”
   which The Home Depot has offered gift             changed Papa, especially after the recent        There was a brief pause and then the
   cards has settled.                                death of her mother.                          son asked Papa what he wanted to do.
                                                                                                       For The Defense      August 2009      55

  Papa said, “OK, I will take it.” The other       was in the hall awaiting their response         which would be performed by a doc-
  family members nodded in agreement.              already having received the defendant’s         tor acceptable to both sides. The result
     A few minutes later, while the papers         in the affirmative. One of the claimant’s        would determine the outcome of the
  were being prepared, the son came to me          attorneys stepped out of the room and           negotiations. Both sides thought about
  and asked for my card. “I don’t want to          was speaking on his cell phone to the           this at the table and came to an accept-
  give it to you,” I said.                         partner in charge saying, “yeah, we [the        able number for settlement without the
     Surprised, he asked “Why?”                    lawyers] get x. Yeah, we get x.” Case set-      MRI.
     “Because I don’t want you to know             tled. So much for protecting the client’s       The flexibility and informality of the
  where I live,” I said.                           interests.                                   mediation process allows for creative solu-
                                                   A good mediator will know who is run-        tions unavailable in other venues. You
                                                ning the show in any given mediation. Mr.       cannot resolve every case through straight-
                                                Craigo was able to accurately discern how       line, distributive bargaining. Accordingly,
Even if lawsuit filing                           much the claimant’s counsel had “put into”      a mediator’s creative approach not only
                                                the case and how much they needed to “get       to solutions, but also to communications,
is inevitable, a mediator                       out of” the case to settle. When the parties    can lead to distinct increases in settlement
                                                reached impasse, he was able to use that        percentages. Whereas retired judges are
can help you to reach                           knowledge to come up with a figure that          usually best equipped for evaluative bar-
                                                would settle the case. And, of course since     gaining sessions than lawyer-mediators,
agreements to accomplish                        the pre-suit investment in the process was      lawyer-mediators have a greater, but not
                                                significantly below what it would be after       absolute, tendency to take a more creative
discreet amounts of                             expert fees and deposition costs accrued,       approach in mediation than the judges.
                                                this number appeared palatable.                    Take away: Retain mediators who have
formal discovery on an                             Take away: Choose a mediator savvy in        flexible approaches to mediation and will
                                                negotiations strategy who understands the       engage creatively in the process whenever
accelerated timetable.                          underlying interests and positions of ALL       possible.
                                                the participants.
                                                                                                What Other Skills Are Necessary?
      We both smiled, then laughed and          Show Some Creativity                            The state of Florida is very active when it
   shook hands.”                                Full-time mediator David Harwi in Phila-        comes to ADR. Among other factors, the
   Take away: Choose a mediator with the        delphia offered this bit of advice:             longer statute of limitations—four years for
ability and inclination to reach out to the        I view my role in The Home Depot medi-       personal injuries—senior status of many
claimants on their own level.                      ation program as that of a facilitator. I    claimants, and crowded, slow-moving
                                                   don’t want to be or appear partial to The    court dockets have encouraged members
Know the Drivers behind the                        Home Depot. I am very candid in my           of both the plaintiffs’ and defense bar to
Negotiations Process                               opening statement about my relation-         resolve disputes early when possible. This
Tom Craigo, an experienced mediator in             ship with the mediation program. I tell      is not always easy when the parties don’t
Los Angeles, told this story about how             all involved that I am not and will not be   speak the same language. The Miami area
his understanding of what really goes on           an adjudicator. The parties and counsel      is ethnically diverse, with a particularly
behind the scenes can influence settlement          always know more about the case than         high percentage of Hispanic claimants.
negotiations to help resolve a claim:              I do, and I have not tested the credibil-    Some claimants do not speak English and
   Maybe one of my favorite Home Depot             ity of any evidence. I am there to facil-    their attorneys speak little or no Spanish,
   mediation stories involves a slip and fall      itate an open and frank discussion of        making meaningful negotiations through
   case involving an elderly woman who             the matter.                                  traditional adjusting methods difficult, at
   would have been loved by a local jury.             However, that does not preclude me        best. It is hard to evaluate a claim when
   Liability was a question, but if a jury         from participating in brain-storming         even the attorney-advocate for a claimant
   bought all the allegations and injuries,        activities with parties and counsel when     does not have a grasp of the relevant facts.
   a verdict could have hit six figures. Her        all are stuck. In one instance everyone         Markel Arrizabalaga of K & A Media-
   counsel told me after a couple rounds           involved wanted to conclude settlement       tion in Miami is a talented mediator. Mr.
   of negotiations his bottom line for set-        during the mediation but the extent          Arrizabalaga is of Spanish-Basque descent,
   tlement was a certain figure. Knowing            of the claimant’s injuries was unclear.      speaks fluent English and Spanish, and uti-
   that was not going to happen and that           Those injuries could only be assessed        lizes his skills not only to help everyone
   the defendant was at about half that fig-        with a current MRI, the cost of which        involved in pre-suit negotiations under-
   ure, max, I shot both parties a media-          was approximately $1,500. The parties        stand the facts, sometimes for the first
   tor’s proposal at just above that same          were not terribly far apart but neither      time, but to also secure the trust of often
   number. The claimant’s counsel left the         side wanted to move. I suggested that        wary claimants in the mediation process.
   room, going to another vacant room. I           the parties split the cost of the MRI,       On one notable occasion, an elderly claim-
56    For The Defense    August 2009
ant, her husband, and niece appeared at             and a second mediation scheduled before         mation. Sometimes, final resolution of dis-
K & A’s offices with their attorney. The             the statute of limitations terminated.          putes cannot occur in this setting because
claimants appeared ill at ease until Mr.               What local juries might think of wit-        critical information has not yet been pro-
Arrizabalaga began his opening in Span-             nesses, particularly the claimant, is criti-    vided by one of the parties or is unavailable
ish. You could hear a pin drop as all eyes          cal in determining case value, and a good       to counsel without additional discovery.
focused on him, the family resting on every         mediator can assist both parties with this      When confronted with these situations, the
word. Smiles and nods abounded and the              projection. For the defense, especially with    neutral-mediator must resist their natural
claimant began to speak excitedly in rapid          retailers, employee witnesses may have          tendency to try to settle the case and shift
Spanish, describing the occurrence, as Mr.          been terminated or may disappear before         their guidance to assisting counsel in map-
Arrizabalaga interpreted for the advocates          trial. Physical evidence may also walk away.    ping out a strategy and plan for informa-
the relevant events from the claimant’s per-        “With these kinds of risks,” said Mr. Fisher,   tional exchange. The skilled mediator will
spective. It was not long before misconcep-         “it may be better to resolve a claim now        propose a formal suspension of the process
tions about the facts were clarified. The            if you meet the claimant and find their          with a specific timetable for discovery and
claimant, feeling as if she had her day in          story credible, even if it has not been fully   a second session of mediation, either before
court, left satisfied with a settlement that         tested.”                                        or sometimes after the lawsuit is filed.”
included a gift card to her “favorite store,”          Geoffrey White of New England-based             Even if lawsuit filing is inevitable, a
embracing Mr. Arrizabalaga as she exited.           Legal Options, Inc., recounted his experi-      mediator can help you to reach agreements
   Take away: Do not overlook the impor-            ence with pre-suit ADR where the parties        to accomplish discreet amounts of for-
tance of specific skills, particularly skills that   were not able to settle the claims before       mal discovery on an accelerated timeta-
enhance communication, or knowledge to              suit, but still significantly advanced the       ble: releases for medical records can be
successful negotiations.                            matter toward a possible later resolution. “I   obtained, key medical or fact witnesses
                                                    always tell the parties involved in pre-suit    identified for depositions, IMEs suggested.
Know When to Hold ’Em                               mediations that one of the objectives of the    These steps can help companies save money
and When to Fold ’Em                                process is an adequate exchange of infor-                       Role, continued on page 61
Critics of pre-suit ADR say that you can’t
resolve disputes without formal discov-
ery because too much is unknown about
the claim. “If you settle under these cir-
cumstances you will over pay,” is some-
thing that we hear a lot. Well, maybe, or
maybe not.
   Atlanta-based mediator Michael Fisher,
who has mediated several claims for The
Home Depot, opined: “A key and often
overlooked benefit of pre-suit ADR is in
taking a claim that is at a dead-end in tra-
ditional, over-the-phone negotiations and
putting it in an environment where the par-
ties can meet and clarify the key disputed
facts.” He recalled a pre-suit ADR session
for The Home Depot in which a claimant
surprised everyone at the mediation with
the revelation that she had taken pictures
with a cell phone, presumably showing the
condition of the premises where the subject
injury had occurred. The existence of the
photos had not previously been disclosed,
although the claim had been pending for
nearly two years. As Mr. Fisher recounted,
“The really interesting thing was that the
claimant had not even told her own attor-
ney about the photos before ADR.” The
mediation was tabled with the understand-
ing that the photographs would be pro-
vided to the defense, along with executed
releases for pre-accident medical records,
                                                                                                          For The Defense     August 2009    57

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